first of all, the SQO moves the bit patterns stored in the "file" into the destination – one word at a time ...
problem: you don't have anything but ZEROs stored in the "file" so all you are getting is ZERO out ... in other words, you're shooting "blanks" at the Destination (target) ...
so ...
manually type something into N7:1 (example: 1), and into N7:2 (example: 2) and into N7:3 (example: 4), and into N7:4 (example: 8) ... that should get you started ...
next delete rung number 1 for the time being ... it will interfere with the operation of the SQO by "fighting" with it for control of bit O:0/0 ...
next ... your Mask is set too restrictive ... it will only let the SQO control ONE bit the way you have it set ... set the mask for 0FFFFH for the time being ... you can always adjust it later once you get things working ...
next set the Length for 5 ... the SQO starts at the ZERO postion (N7:0 in your case) as a "rest position" and THEN it will go on for four "active" steps - before recycling back to step 1 ... so if you want to control four lights, you need something like five steps for the Length setting ...
this should get you started - and you can tweak the operation from there ... see if these ideas help ... post again and tell us how things are going ...
survival tip: skip the COP instructions in my demo program for now ... get the SQO working - and then experiment with the COPs ... but to answer your question: those rungs allow the operator (you) to "change the pattern" of flashing lights ... in other words, each COP loads a different pattern of ONEs and ZEROs from a "storage" file area into the "active" file area used by the SQO ...
and here's another SQO post that might help you along ...
http://www.plctalk.net/qanda/showthread.php?postid=4220#post4220
good luck with your project ... offline until tomorrow ...